What We've Learnt About Globalization

Author:

Andrey Kortunov, Ph.D. in History, Director General of the Russian International Affairs Council, RIAC member

21.11/2019

Speaking notes during the Beijing Forum 2019

As noted by Pierre Teilhard de Chardin, “Man came silently into the world". This observation made by the great 19th Century French philosopher and theologian could be referring to globalization. And indeed, globalization came into the world silently, and we don’t truly know when exactly that happened. Some attribute its beginning to the end of the 20th century, while others connect it with the creation of global governance institutions after World War II. Some believe that the foundation of globalization was laid during the Industrial Revolution of the 18th–19th centuries; others push the origins of the global world back to the Age of Discovery in the 15th–16th centuries.

Current international discourse on globalization began more than 30 years ago. Politically, such discussion is possible mostly thanks to the end of the Cold War and the world recovering from being split into two opposing and mutually isolated systems. The most crucial technological incentive for such discourse was the emergence of the global Internet and the information and communication revolution. Economically, today's discussions about globalization often trace back to the end of the 20th century, particularly the sharp increase in world trade and investment, the global downward trend in tariffs and other trade restrictions, as well as the successful implementation of regional integration projects (EU, ASEAN and others).

My remarks will focus on how our views on globalization have changed over the past three decades. Have our hopes from thirty years ago come true? Have we advanced in understanding the driving forces of globalization and its internal logic? Have there been significant shifts in our assessments of the positive and negative aspects of globalization, its main achievements and inevitable side effects? Have we, in 2019, revised fundamental ideas driving globalization that seemed to be unshakable axioms back in 1989?

My answers to these questions, obviously subjective and undoubtedly vulnerable to criticism, can be summarized in six short sections.

1. Resolution or Evolution?

Three decades ago, most observers, including myself, believed that globalization would result in a fast and radical restructuring of the system of international institutions, legal norms, and foreign policy practices of individual states. However, globalization has not yet led to a revolution of the world order. The security institutions of the previous era (UN, NATO), as well as development institutions (IBRD, IMF, WTO), showed a high degree of sustainability, confining themselves only to cosmetic repairs of their priorities, procedures and operation principles.

Neither the rapid collapse of the Soviet Union, nor the rapid rise of international terrorism, nor the global financial crisis of 2008–2009 entailed global changes of a revolutionary nature. After 30 years, the extent to which the world system can be managed has decreased instead of increased. The gap keeps growing between the objective degree of humankind's unity and how aware the world's leaders, political elite and societies are of that unity.

2. Mutual Benefit or Factor for Polarization?

In the 1990s, it was widely perceived that “a rising tide lifts all boats”, meaning the benefits of globalization will somehow be available to everyone. In some sense, the fact that today the average human being lives better, brighter, and longer than three decades ago reinforced this view. But the benefits were hardly distributed equally; globalization has divided the world into winners and losers. Moreover, the dividing line between the two does not always lie between “successful” and “unsuccessful” states. More often it lies within such countries themselves: between certain social, age and professional groups, between large urban agglomerations and countryside areas, between rich and poor regions. That is between those who “fit in” to the new way of life and those who simply fell behind.

The inevitable result of socio-economic polarization is political polarization, which is the rise of weak governments, incapable of taking unpopular and perhaps difficult decisions. Note that it would be incorrect to perceive growing socio-economic inequality as an inevitable consequence of globalization alone: it is sufficient to mention how Scandinavian countries confidently fit into the globalization trend while maintaining one of the lowest Gini indexes in the world. Referring to globalization as the root cause of all problems very often hides the reluctance of leaders (as well as experts) to admit their own mistakes and shortcomings.

3. Permanency or Discreteness?

One of the notions of globalization, popular at the end of the 20th and the beginning of the 21st century, was its perception as a relatively linear, permanent, and continuous process. It was assumed that over time, the pace of globalization would only increase, and the resistance to globalization would weaken and decline. However, the second decade of the 21st century with Donald Trump taking office as President of the USA and the beginning of Britain's withdrawal from the EU demonstrated that globalization could be hindered, slowed down, and in some areas and for some countries, even reversed.

This slowdown is linked to the resistance of various parties who lost touch with new technological and economic structures and the features of such structures. For example, one of the outcomes of the Fourth Industrial Revolution could be the large-scale displacement of workers from the production process, a sharp reduction in labour requirements of developed countries and, as a consequence, an equally drastic reduction of international migration flows. That means that the supply of labour from the developing world will increase, but the demand for it from the developed world will decline rapidly. The development of "new energy" (renewable sources and shale hydrocarbons) will sooner or later bring down international trade of oil and gas, one of the main pillars of world trade in general. Discussions on the “reversibility” of globalization that seemed unthinkable twenty years ago have begun. Meanwhile, terms like “globalization crisis”, “de-globalization” and even “the post-global world” are gaining momentum.

4. Synchronization or Asynchrony?

Since the beginning of the 1990s, research on globalization was focused on its financial and economic dimensions. By the end of the 20th century, it was perceived as a complex process that affects all aspects of human life. It was assumed that financial and economic globalization would inevitably push social, cultural and political globalization, just as a locomotive pulls rail cars. Perhaps humans would somehow manage to synchronize its dynamics in all the above-mentioned spheres by ensuring they interact with each other and generate a cumulative effect, accelerating the process as a whole.

It became clear that certain areas of human activity demonstrated a level of “resistance” to globalization. Therefore, at the moment, it is impossible to synchronize its processes. The growing gap between the economy and politics proved to be especially evident and dangerous for the phenomenon: the economy requires strategic, systemic, global, continental and multilateral decisions, while politics entail tactical, opportunistic, local and one-sided priorities. Moreover, “identity politics” prevail over the “politics of interests” increasingly. This further widens the gap between the way the economic and political domains react to globalization and related events.

5. Universalism or Pluralism?

The global triumph of political and economic liberalism was accompanied by the rise in interest in the phenomenon of globalization. During the 1990s, “liberal globalization” and “globalized liberalism” were perceived as inextricably linked concepts, if not as synonyms. That entails that the accelerators of globalization, as well as one of its inevitable results, should have been the final victory of liberal economic and political models on a global scale. Any non-liberal development models were interpreted in this context as manifestations of archaic nature, symptoms of inconsistent and incomplete modernization, impeding their successful integration into the new global world.

6. Core or Periphery?

In the late 1980s – early 1990s, it was assumed that the “waves” of globalization would spread mainly from the economic, political and technological core of the modern world (the aggregate West) to its periphery. Large “semi-peripheral” countries — such as Russia, China, India, Brazil and others, should have become transmission mechanisms. Moreover, experts predicted that when moving away from the core closer to the periphery, the resistance to globalization would increase, generating conflicts, trade wars, growth of isolationism and nationalism. These impulses of de-globalization, though, would weaken the closer they get to the global core.

History shows that, in many cases, the “waves” of globalization are moving the opposite direction — from the periphery to the core. The aggregate West is trying to fence itself off the periphery by implementing restrictions on migration, sliding back into protectionism, repatriating previously abandoned industries and allowing the rise of nationalism. The United States, perceived by the majority as the undisputed leader and primary driver of globalization, remains at the very lowest end in almost all of its dimensions. This applies to world trade activity, with the United States lagging behind China. Although the aggregate West as a whole currently surpasses the aggregate non-West in its involvement in globalization processes, the question of who will become the main driver of these processes in the future remains open.

Interim Results

What does all this mean for our perception of globalization? Perhaps none of the above sections is sufficient to conclude that the process reached its peak at the beginning of the century and is now in decline. Likewise, Trump's Administration taking office in the United States was not necessarily the turning point in globalization trends. DHL’s latest annual Global Connectedness Index concluded that such processes have gained momentum and remained stable, despite some fluctuations. The Index assessed the dynamics of globalization according to four critical criteria: shares of trade, capital, information, and people flows crossing national borders.

The phenomenon turned out to be much more complex, more controversial and less predictable than it had seemed before. Moreover, the world is only at the very beginning of the age of globalization. Currently, roughly 20% of economic output across the globe is exported, while only 17–19% of tourists cross their countries’ borders. On average, transnational corporations produce only 9% of their products outside their country of origin, while roughly 7% of phone call minutes are international and only 3% of people live outside the countries they were born. Numerous academics and journalists who expressed ideas such as “the world has become borderless”, “distance is dead” and “the world is flat”, seem to be reflecting what the future might hold, rather than what the world looks like today.

Nevertheless, it is essential to prepare for the future today. Perhaps the main lesson of the last thirty years is that market mechanisms alone can not be a universal solution to economic and political issues: neither at the level of individual elements of the global social system (states) nor at the level of the system as a whole. Increasing the manageability of the system in the age of globalization is more relevant than ever before in the history of humankind. Accordingly, there remains a need for comprehensive interdisciplinary research, revealing the features of the phenomenon of globalization at a new stage of its development.